Practice Question 7

Q) As per the ‘Periodic Labour Force Survey’, unemployment in the country is at a four-decade high. Discuss the factors which are responsible for the rise of unemployment rate.

Superb Hints:

  • Unemployment in India is a major social issue. The rise in unemployment rate can be traced to various factors. The prime among them is farming. It has become very unattractive given the vicissitudes of the monsoon and government policy.


  • With the advent of GST, there has been an upheaval in the small and medium-sized enterprises (SME) space which was a major absorber of labour all through the years especially in rural areas.


  • Given that the economy is not growing at the desired pace of 8 percent-plus in the last three years; demand for labour has been restricted to the higher end— engineers, management graduates and other professionally qualified personnel.


  • Stringent labour law is another factor that have ensured that companies have moved towards technology which will always be a challenge in a labour surplus economy.


  • While we do take a lot of credit in attaining numbers of school enrolment or even higher education, the quality of education in the public space is inadequate which puts students at a disadvantage. Further, those students from a vernacular background will find openings only in the self-employed or government spaces. The latter is also economising on head count which makes future absorption a challenge.

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